Up until recently, credit card companies focused most of their attention on targeting consumers – ignoring the huge potential of small business owners. Lack of interest in the past was due to the risk and the alarming rate of small business failures. But with the success and prosperity of the late 1990s, credit card issuers have taken notice by targeting business owners with ‘small business credit cards‘.
The Long List of Benefits
Business credit cards provide many benefits to small business owners. Although these offers weren’t widely available in the past, more and more credit card issuers are offering small business credit cards – and the benefits are worth considering. Here’s just a few reasons why many business owners are choosing small business credit cards to fund and operate their businesses:
- Extended Cash Flow: The No. 1 reason small businesses fail is insufficient capital. Although a business loan might be the best choice to fund large projects or startup costs, business credit cards can help regulate and control cash flow during daily business operations. For example, paying a supplier or contractor with a credit card can offset project costs until the customer pays the invoice. Or, a business credit card can be used to pay for expenses during ‘slow months’ until cash flow is more readily available.
- Rewards & Bonuses: Small businesses with employees that frequently travel, entertain or purchase from specific merchants can earn bonuses which could reduce overall operating expenses. Earn cash, travel, merchandise or other rewards catered to your business needs. If you can pay the balance in full each month, you’ll avoid interest charges completely – making one of these offers even more beneficial for your business. Cash back programs provide the simplest way to earn rewards. But for businesses with large travel expenses looking for ways to save, an airline mile credit card might be a better choice.
- Simplify Record Keeping: Maintaining proper records is crucial for any small business owner. A business credit card can simplify record keeping and expense reporting by providing detailed monthly, quarterly and year end statements. Monitor spending by category and employee; record and report rewards and simplify tax preparation. Plus, you’ll have your records offsite which will help keep the clutter down and secure your paperwork in a safe place.
- High Credit Limits or Limit-Free: Business credit cards normally offer much higher credit limits than standard consumer credit cards. Some offer no preset spending limit at all. For businesses that have large expenditures or significant spikes due to inventory, business credit cards provide the flexibility needed to keep business operations up-and-running.
- Low Interest / 0% APR: Business credit cards tend to have great low interest rates. Generally, business credit cards have lower rates than standard consumer cards. And you’ll also get the added benefit of a 0% introductory APR with most offers which will help you save on new purchases and balance transfers for anywhere from 6-15 months.
- Emergency Credit Needs: Unexpected circumstances are sure to arise running any type of small business. For businesses that work on a cash basis, a small business credit card is especially helpful for emergencies. If extra money is needed for any reason, it’s available for you to to use and can be repaid over time or when it’s available.
Choosing a Small Business Card
Business credit cards offer a wide variety benefits and include many features not found with ‘standard’ credit cards. With so many new offers becoming available, it’s important to shop around and compare. Examine all the details, including APRs, terms and fees. If rewards are important to you, make sure you understand the pros and cons of each program. Picking the right credit card can affect the way you do business – and choosing the best offer will determine how much yo benefit over time.
* See our complete list of Small Business Credit Cards →